Understanding Medicare

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Almost all Americans who work pay into the Medicare system, but not everyone knows about the benefits they will become eligible for when they turn 65. Under the Affordable Care Act, Americans will continue to see changes in coverage and fees for healthcare, including for Medicare:

1. Federal subsidies begin phasing in for brand-name prescriptions filled in the Medicare Part D coverage gap to reduce out of pocket costs for beneficiaries. Coinsurance will drop from the 2010 level of 100 percent of costs to co-payments of 25 percent in 2020.

Additionally, a 50 percent discount automatically will be applied at the pharmacy counter on Part D-covered prescription drugs while beneficiaries are in the doughnut hole.

2. The Medicare Part A (hospital insurance) tax rate will increase from 1.45 percent to 2.35 percent on earnings over $200,000 for single taxpayers and $250,000 for married couples filing jointly. When it comes to higher-income earners, there will also be a new 3.8 percent assessment on unearned income, such as investment returns.

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